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2 years ago
The two (2) biggest contenders within the cloud industry have both demonstrated outstanding performance and results for the 4th quarter of 2019. What we, now, must consider is: ‘Which is the better team to bet on, as we proceed deeper into 2020?’. Analysts and commentators have, of course, had their own opinions and even vested-interests for political reasons to favour one over the other. There are obvious issues for Amazon.com, Inc (NASDAQ: AMZN), with presidential and regulatory pressure, but that negative view is in total opposition of our high favour of its massively diversified revenue streams.
Moving forward, we will consider nothing more than the technical setup for both AMZN and Microsoft Corporation (NASDAQ: MSFT) as we delve deeper into 2020; to help provide a valid and unbiased trading strategy.
First things first, let’s point out that the MSFT chart above dates all the way back to 2012. This is when both of these stocks began to make major market gains. What is most obvious in this diagram, is the parabolic move that Microsoft has made over the course of the last, and the velocity of that move. It has intensified in 2019-2020, to such a extent that it looks very unsustainable, and the $140 mark is the only notable support, below the current $170 price level.
AMZN has lagged considerably in the velocity of it’s move in 2019-20, while that may have been a cause of frustration to Amazon investors, the longer-term setup we believe to be much better. If the stock can breakout above $2050 investors can have the security of a 18 month foundation/support under the stock to sustain further gains.
If you are considering an investment in AMZN, it may be wise to let the dust settle in the market, and avoid the high volatility and noise in recent days as a much-needed pullback is yet to attract investors. A sustained move above $2050, could be considered as a nice entry level on Amazon; but with such large cap stocks, caution is vital.
Our shorter-term perspective on the 1-Week AMZN chart can be found below, and you will see 3 highlighted boxes: which there is confluence of Fibonacci expansion and extension levels; leading into resistance, thus acting as nice price targets.